Economics, Policy and Government

Capitalism is based on Selfishness and Greed

Bringing you lower quality and fewer choices since the 16th Century, reads the caption to the image of capitalism. The grim image of the evils of capitalism is captured in William Blake’s evocative phrase “the dark satanic mills.” Is it true that because capitalism rests on selfishness and greed that we don’t have a heaven on earth?

In human society in all ages the number of angels devoid of any greed and selfishness is astonishingly low. Most people are self-interested at least, if not outright selfish; and most people want more of the good stuff for themselves and their loved ones, if not outright greedy. That’s the truth about the human condition. That’s what we have to work with, and bemoaning that fact, or worse ignoring that fact, is not going to help at all.

Any system that recognizes human nature to be self-interested and works with that flawed (by angelic standards, that is) stuff is likely to be better than a system that depends on angels for it to work.

The free market system of voluntary exchange and private property — a good operational definition of capitalism — is the best we can do. Can we do better? Yes, if people could be persuaded to become angels. Then of course, a system of “from each according to his need to each according to his abilities” could be better. Perhaps. But attempts at perfecting human nature is a fool’s errand. It can’t be done. They have killed untold millions when they tried it — as the bloody history of humanity attests.

Communism and socialism have great, good intentions. The outcome could also had been great if only mere humans had been made into angels. That outcome did not obtain since men are not angels, and cannot be made into angels.

Actually, if men were angels, then it does not matter what system you have — capitalism, socialism, communism, anarchy, democracy, dictatorship, whatever.

OK, here’s a brief video for your entertainment and edification. An extract from a conversation between Milton Friedman and Phil Donahue. Friedman had the enviable habit of always answering questions — even really silly questions — with a smile and gentle humor. Donahue was a good guy even though he appears to be clueless. Enjoy.

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12 thoughts on “Capitalism is based on Selfishness and Greed”

Only a complete lack of imagination or being a lapdog for a capitalist think tank (as Milton Friedman was) would make one say that: Of all the possible social systems, capitalism is the best.

Right now, hardly any country is purely capitalistic or purely socialist. Large parts of the economy of most countries is run by the state or at least very closely monitored by the state. So, it is tough to draw solid conclusions from the current state of affairs.

One could say that the UK, roughly during the period 1650s-1910s (English Civil War – Birth of the Labour party) and the USA during the period 1860s-1930s (US Civil War – Great Depression and FDR’s Presidency) are as close to the capitalistic system as one can hope for.

It is undeniably true that these were the periods and the countries in which the most EXTRAORDINARY advancements in technology took place. Except for the electronics revolution, most of the fundamental technological bases of the modern world were invented during these periods and in these countries.

Yet, on the other hand, these periods were marked by regular economic crises (about one big one consistently every decade till the great depression and WW2) and extreme differences in wealth and power between the few capitalists owners and the workers who were the bulk of society. It was these crises and the fact that with each one there were fewer capitalists and more unemployed workers that made Marx and many other early socialists get the idea that there MUST be a better way. The big question they asked was: given the enormous productive forces that capitalism has already invented, are the capitalists needed any more?

To fulfill the basic wants of people: food, clothing, shelter, power, transport, communication, etc., Socialism (i.e. common ownership of the means of production) with the technology developed by the 1930s (or even 1890s) is more than adequate. No angels are required. There are many forms of socialism that provide an adequate system of incentives to make ordinary `greedy’ men to carry out this program. Of course such forms will reward disproportionately (of course in pay and not in equity) those managers, engineers, etc. who are more vital to carry out the program than the lay workers. This has no fundamental contradiction with socialism, since the essence of socialism is that the benefits of automation should be shared (roughly) equally by all [1]. If someone gets paid 10X more, 100X or even 1,000X more than the average, it is of no concern, but if a top few are paid 1,000,000,000X more that the bottom, THAT is a problem!

You wrote that, “One could say that the UK, roughly during the period 1650s-1910s (English Civil War – Birth of the Labour party) and the USA during the period 1860s-1930s (US Civil War – Great Depression and FDR’s Presidency) are as close to the capitalistic system as one can hope for.”
So according to you, a period of cruel, vicious and murderous slavery, colonization and huge protectionism in the form of tarrifs and quotas was as close to the capitalistic system as one can hope for?

@keshavbedi: “…a period of cruel, vicious and murderous slavery, colonization…”. Thanks for raising a pertinent point which I could not reconcile since my college days. Is the West’s progress due to capitalism or colonialism/neo-colonialism? As discussed by you below, many or all notable developments in science are state sponsored. Mr. Atanu Dey has highlighted the importance of first man in space in human history from U.S.S.R in this blog not far back.

I find it remarkable how talented the people of the erstwhile Soviet Union were. Trouble was that even talent could not overcome the self-imposed handicap of communism. Remember that the Soviet Union was not a very large union — only around 200 million people around 1960. They were very successful in science and technology. But communism/socialism forges very heavy chains. Without freedom, even talented people fail. Slavery is always harmful and freedom always the key to prosperity. Too bad India continues to labor under socialist slavery. [Link to my post.]

Is the West’s progress due to capitalism or colonialism/neo-colonialism?

If you are serious in your quest to understand the source of the West’s progress, you owe it to yourself to investigate the matter seriously and disabuse yourself of the notion that basically the West progressed by stealing wealth from others. I’d be happy to engage in a conversation on the topic.

The big question they asked was: given the enormous productive forces that capitalism has already invented, are the capitalists needed any more?

That’s really a big question. The answer depends on your understanding of what “capitalism” is, and how it works. I don’t know what your background is but I am fairly sure that you are not an economist. Fortunately, it is possible to understand the fundamentals of the subject without having to spend decades learning the subject. I earnestly implore you learn the basics. I offer my modest services to that end.

What he is saying is simply not true and the argument he uses is quite outlandish too.
A researcher who is passionate about his work doesn’t care who his employer is.
Does he mean to say an intelligent folk will do meaningful research only if his employer is a private entity and he won’t do it if government is it’s employer?
According to the astrophysicist Neil Degrasse Tyson, most of the space projects were funded by Government and it was only when they adequately assessed the risk and assumed the role of being in the forefront that private players entered into the play.
One of the greatest scientific institute, CERN, which had made important discoveries is actually government funded.https://en.m.wikipedia.org/wiki/CERN
I am not sure on it, but even the project which lead to the birth of the internet was also funded by Government.

Noam Chomsky argues how internet was developed in the state sector and was then handed over to private entities.As a matter of fact, he says everyone except for the economists, everyone knows that under the name of military funding, the US government funds the next generation technologies.So Milton Friedman’s idea is pure eyewash, not to say that his reading of history is wrong too.

For those of us who were adults in the 1990s the video is all familiar history. I found the exposition by Chomski amusing, stand-up comedy level. I agree and see the way he sees things which are so true to form that I started to get this LOL sensation. Thanks for the video.

“The free market system of voluntary exchange and private property — a good operational definition of capitalism — is the best we can do. Can we do better? Yes, if people could be persuaded to become angels. Then of course, a system of “from each according to his need to each according to his abilities” could be better. Perhaps. But attempts at perfecting human nature is a fool’s errand. It can’t be done. They have killed untold millions when they tried it — as the bloody history of humanity attests.

Communism and socialism have great, good intentions. The outcome could also had been great if only mere humans had been made into angels. That outcome did not obtain since men are not angels, and cannot be made into angels.

Actually, if men were angels, then it does not matter what system you have — capitalism, socialism, communism, anarchy, democracy, dictatorship, whatever.”

I just began reading Mises’ book “Socialism” and in the introduction to his book, on page 26 Mises says:
“If one can only argue against Socialism that the imperfections of human nature make it’s realization impossible, or that it is inexpedient under existing economic conditions to proceed at once to socialization, then one merely confesses that one has capitulated to socialist ideas.”